You have requested our opinion concerning specific provisions
of the Administrative Procedure and Texas Register Act (APTRA),
article 6252-13(a), V.T.C.S., as they apply to the State Board of
Insurance (board) with respect to the Texas Catastrophe Property
Insurance Association (association) and its plan of operation
(plan). The board first approved this plan on May 14, 1971 and
most recently approved it with amendments on February 4, 1983.

of all property insurers authorized to transact property
insurance in this State, except those companies that are
prevented by law from writing coverages available through the
pool on a Statewide basis.

One of the duties of the association's initial board of directors
is to submit a proposed plan of operation to the board. Section
5(d) of the act requires that the plan

Shall set forth the number, qualifications, terms of office,
and manner of election of the members of the board of directors
and shall provide for the efficient, economical, fair, and
nondiscriminatory administration of the Association.

You ask two related questions: (1) is the plan a 'rule' as
defined by the APTRA; and (2) if it is a rule, is the plan a rule
of the board or of the association? In responding to your
inquiry, we adhere strictly to the definition of 'rule' as given
in article 6252-13a, section 3(7), V.T.C.S.:

(7) 'Rule' means any agency statement of general
applicability that implements, interprets, or prescribes law or
policy, or describes the procedure or practice requirements of an
agency. The term includes the amendment or repeal of a prior
rule but does not include statements concerning only the internal
management or organization of any agency and not affecting
private rights or procedures.

We conclude that the plan is not a rule of the association.
The APTRA defines a rule as an 'agency statement.' Therefore,
the plan cannot be a rule unless it is promulgated by a specific
agency: i.e., a body empowered by statute to promulgate rules.
Since article 21.49 of the Insurance Code does not empower the
association to promulgate rules, the association is not a
rulemaking body. The association is only empowered to submit a
proposed 'plan.' All rule-making powers are reposed in the
board.

The association is a statutorily mandated association of
private insurance companies. It operates on assessment fees
collected from the member insurance companies; it receives no
funds from the state. Although the association initially
formulates the plan, the board is its ultimate overseer. The
board has full power to approve, disapprove, and amend the plan.
The association in no manner acts with the sanction of the state;
rather, it must look to the board to enforce any provisions of
the plan: e.g., in the case of a member who refuses to pay his
assessment fee. Although the association was created by state
statute, it is wholly controlled by the board, and it acts
primarily as an advisory body to the board.

We conclude that the plan is a rule of the board. The State
Board of Insurance is unquestionably an agency. For the
following reasons, we conclude that the plan is the board's
statement, and that it is a 'statement of general applicability
that implements, interprets, or prescribes law or policy. . . .'
V.T.C.S. art. 6252-13a, s 3(7).

Section 5(d) of the act orders that

[t]he proposed plan shall be reviewed by the Board and
approved, unless it finds that such plan does not properly
fulfill the purposes of this Act. . . . If the Board approves
the proposed plan, it shall certify such approval to the
directors and the plan shall become effective 10 days after such
certification.

You have furnished us with copies of three board orders signed
by all of the board members which document the board's approval
of the plan. In our opinion, this approval constitutes the
acceptance of the plan by the board as this agency's own
statement within the meaning of article 6252-13a, section 3(7).

Having decided that the plan is an agency statement, we must
now decide whether this statement satisfies the 'general
applicability' requirement of article 6252-13a, section 3(7).
The plan is the main guide to the functions, powers and
procedures of the association. It contains definitions which
complement those given in the act, e.g., 'net direct premiums.'
The plan provides a schedule of meetings for the association and
a procedure for voting by the members. It also lists the
qualifications required for election to the association's board
of directors and details the election procedure. The plan
outlines the power of the board of directors and describes the
method of selection and duties of the officers. None of the these
provisions is contained in the act itself.

The plan elaborates upon the board's powers to enforce its
provisions. It provides for the collection and investment of
insurance premiums and for the assessment of fees from the
members. The plan also supplies a formula for credit which the
association will give to any member for insurance which it may
write voluntarily; this feature is not included in the act. With
regard to any association member's failure to pay its assessment
fee, the plan gives the board the power to suspend that member's
certificate of authority; this power is also not mentioned in the
authorizing statute.

The plan of operation goes on to describe the insurance
policies that the association may issue. Included in this
section of the plan is a definition of 'insurable property' that
clarifies the definition provided in the statute (e.g., the
plan's definition excludes mobile homes; see Attorney General
Opinion
H-824 (1976)). A limit on the amount of liability is
also provided.

The method of application for insurance, acceptance, and
rejection is described in detail in the plan of operation, as is
the method of cancellation of a policy. Finally, the plan
includes a detailed building code, which contains requirements to
minimize windstorm damage. These procedures further implement
the statute.

When the details of the plan of operation are compared with the
general standards that determine whether something is a 'rule,'
the inevitable conclusion is that the plan is a rule. The plan
is of general applicability; it covers virtually all property
insurers and all persons in a catastrophe area who may wish to
obtain insurance from the association. Thus, the plan has a
substantial impact on a business group as well as on a large
segment of the public. The plan implements, interprets, and
prescribes both law and policy through its various mandatory
provisions. The plan contains specific provisions that implement
the general policy of the Insurance Code; it augments, rather
than merely interprets, existing law; and, it has a significant
external impact on the private rights of both the industry and
the public.

You advise that if we should conclude that the plan is a rule,
you will initiate rule making procedures under article 6252-13a,
section (5), V.T.C.S. You express concern about enacting this
rule before the onset of this year's hurricane season. We direct
your attention to article 6252-13a, section (d) of the APTRA
which provides for an emergency rule making procedure. The board
should, however, begin standard rule making procedures as well
since the emergency provisions have only a temporary effect.

SUMMARY

The plan of operation of the Texas Catastrophe Property
Insurance Association is a rule of the State Board of Insurance.